Bloomberg News

Nabucco Gas Pipe’s Cost to Fall on Shorter Route, Mitschek Says

By Jonathan Tirone and Ercan Ersoy
November 15, 2012

Nabucco West will cost less than the
7.9 billion euros ($10 billion) originally projected for the
pipeline project because the scope of construction has shrunk,
said Managing Director Reinhard Mitschek.

“It is a shorter line with 1,315 kilometers (817 miles)
and we expect it to be less than the original,” Mitschek said
today in an interview in Istanbul. “It would be logical to
think there will be a proportional reduction.”

Nabucco was originally envisioned to ship gas from the
Caspian, Middle East and North Africa as much as 3,900
kilometers to Europe. The revised project, Nabucco West, will
connect to the Trans-Anatolian pipeline, a link known as Tanap
planned to carry Azeri gas through Turkey. Mitschek declined to
specify the new capital expenditure plans.

Nabucco project partners want to reach an agreement with
partners in Azerbaijan’s Shah Deniz II field by the end of this
year about taking a stake in the proposed link, Mitschek said.
The group originally expected an agreement in October.

“We are not in a race,” Mitschek said. “We take time to
tune the best project for sellers and buyers.”

BP Plc (BP/), Total SA and State Oil Co. of Azerbaijan are among
the developers of the Shah Deniz natural gas field, which may
hold 1.2 trillion cubic meters of the fuel in Azerbaijan’s part
of the Caspian Sea. The partners have an option to acquire as
much as 50 percent of the Trans Adriatic Pipeline, or TAP, a
Nabucco competitor.

Azerbaijan is expected to choose to supply either Nabucco
or TAP by mid-2013, Mitschek said.

Europe needs 500 billion cubic meters of natural gas
annually and Nabucco could feed as much as 23 billion cubic
meters a year, Mitschek said, reiterating that pipeline
construction should begin in 2015.

To contact the reporters on this story:
Jonathan Tirone in Vienna at
jtirone@bloomberg.net;
Ercan Ersoy in Istanbul at
eersoy@bloomberg.net

To contact the editor responsible for this story:
James Hertling at
jhertling@bloomberg.net